The government has announced a plan to overhaul the public energy sector, which has been under severe criticism for bungled overseas resources development projects during the previous administration.
Under the blueprint, individuals or private businesses will be able to sell their electricity to consumers directly. Gas purchases and wholesales, which are currently monopolized by Korea Gas Corp. (KOGAS), will also be open to the private sector.
KOGAS and Korea National Oil Corp. (KNOC) must dispose of their non-core assets, including overseas oil fields, and the Korea Resources Corp. (KORES) has to withdraw from overseas resources development. The Korea Coal Corp. (KOCOAL), which has long suffered from decreased coal consumption, will cut coal production and slim down its workforce. Eight state-run energy-related companies, including Korea South-East Power, will go public.
Restructuring state energy companies is long overdue, given that their combined debt amounted to 170 trillion won, nearly one third of the total debt in the public sector. So the government deserves credit for removing inefficiencies in the public energy sector.
But the latest retooling blueprint falls far short of meeting the public's expectations.
First and foremost, KOCOAL and KORES, which had been expected to face closure, managed to remain alive. Electricity sales will be open to the private sector, but the date of the opening has not been fixed.
Furthermore, the government retreated from its original plan to merge KNOC and KOGAS. The two state firms and KORES are currently operating 91 projects abroad, but most of them are insolvent due to their hasty expansion in investment and plunging resource prices.
The creation of a bigger unit that would be in charge of overseas energy development would be beneficial to the country both in terms of funding capability and international recognition. But the latest overhaul plan failed to touch on this crucial issue.
The biggest problem is that the government stopped short of drawing a grand blueprint for our energy industry as a whole, while allowing state energy corporations to become too big to fail. This is disappointing, considering that the shift of the global energy trend from oil and coal to renewables has been nurturing new growth industries.
The government boasts that its restructuring of the public sector that began in 2013 has produced tangible results in cutting debt and slashing excessive employee welfare, but few realize the effects. Rather, the number of public entities rose from 295 in 2013 to 323 this year. The government should push boldly and swiftly for the merger of state corporations whose functions are duplicated.
Under the blueprint, individuals or private businesses will be able to sell their electricity to consumers directly. Gas purchases and wholesales, which are currently monopolized by Korea Gas Corp. (KOGAS), will also be open to the private sector.
KOGAS and Korea National Oil Corp. (KNOC) must dispose of their non-core assets, including overseas oil fields, and the Korea Resources Corp. (KORES) has to withdraw from overseas resources development. The Korea Coal Corp. (KOCOAL), which has long suffered from decreased coal consumption, will cut coal production and slim down its workforce. Eight state-run energy-related companies, including Korea South-East Power, will go public.
Restructuring state energy companies is long overdue, given that their combined debt amounted to 170 trillion won, nearly one third of the total debt in the public sector. So the government deserves credit for removing inefficiencies in the public energy sector.
But the latest retooling blueprint falls far short of meeting the public's expectations.
First and foremost, KOCOAL and KORES, which had been expected to face closure, managed to remain alive. Electricity sales will be open to the private sector, but the date of the opening has not been fixed.
Furthermore, the government retreated from its original plan to merge KNOC and KOGAS. The two state firms and KORES are currently operating 91 projects abroad, but most of them are insolvent due to their hasty expansion in investment and plunging resource prices.
The creation of a bigger unit that would be in charge of overseas energy development would be beneficial to the country both in terms of funding capability and international recognition. But the latest overhaul plan failed to touch on this crucial issue.
The biggest problem is that the government stopped short of drawing a grand blueprint for our energy industry as a whole, while allowing state energy corporations to become too big to fail. This is disappointing, considering that the shift of the global energy trend from oil and coal to renewables has been nurturing new growth industries.
The government boasts that its restructuring of the public sector that began in 2013 has produced tangible results in cutting debt and slashing excessive employee welfare, but few realize the effects. Rather, the number of public entities rose from 295 in 2013 to 323 this year. The government should push boldly and swiftly for the merger of state corporations whose functions are duplicated.
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